4/15/2013

ISSUES & CHALLENGES IN INDIAS POWER SECTOR

Power Shortage and Capacity Addition
Fuel Choice Improving Efficiency Promoting Competition

4/15/2013

ELECTRICITY AS PRIVATE ENTERPRISE

Pre-1948, all generation privately-owned. Total installed capacity:1300 MW Retail distribution only around generating stations. No transmission. Licensed & regulated by Govt. under Indian Electricity Act, 1910.

Govts role as regulator only.

4/15/2013

ELECTRICITY NATIONALIZED
PostIndependence, Electricity( Supply) Act, 1948, aimed to increase access to electricity.

Transmission to wider hinterland of generating stations creation of grid.

All privately-owned generating stations nationalized with some exceptions. Creation of vertically-integrated SEBs as quasicommercial entities.

Govt.becomes owner and operator in addition to being regulator. Conflict of interest.

4/15/2013 4

DOWNWARD SLIDE
Large demand-supply gap (2009-10) Energy shortage:10% Peak shortage:12.7% Low per capita consumption: 672 kwh per annum By early 90s, State Electricity Boards were bankrupt. Accumulated losses of the SEBs exceeded Rs.26,000 crores in 2000-01. Unpaid dues to central power generating companies alone exceeded Rs. 40,000 crores. Total return of SEBs in 2005-06 was (-) 26%. Financial collapse leading to operational collapse

4/15/2013

INDIAS INSTALLED CAPACITY BY FUEL (as on 30 APRIL 2012)

INDIA'S INSTALLED CAPACITY

Fuel TOTAL THERMAL COAL GAS DIESEL NUCLEAR HYDRO RES

4/15/2013

MW 131703.36 112022.38 18481.05 1199.93 4780 38990.4 24503.46

199977.22

% age 65.86 56.02 9.24 0.60 2.39 19.50 12.25

100.00
6

INDIAS INSTALLED CAPACITY FUEL WISE AS ON 30 APRIL 2012

ELECTRICITY GENERATION IN SELECTED COUNTRIES 2007 & 2009

COUNTRY
GENERATION

2007
(in Twh)

%age of total

GENERATION

2009
(in Twh)

%age of total

U.S.A China Japan Russian Fed. India

4367.0 3277.7 1160.0 1014.9 774.7

22.0 16.5 5.8 5.1 3.9

4149.6 3725.1 1115.1 993.1 869.8

20.7 18.5 5.5 4.9 4.3

Germany 4/15/2013

636.5

3.2

596.8

3.0 8

PER CAPITA CONSUMPTION OF ELECTRICITY

(in Kwh per annum)

World Average OECD countries Middle East Latin America China

Asia Africa India
4/15/2013

2596 8365 2980 1695 1802

646 563 612

SOURCE : WEC WORLD ENERGY STATISTICS,20079

PER CAPITA CONSUMPTION OF ELECTRICITY IN INDIA

YEAR
1950 2007 2012 - Target

PER CAPITA CONSUMPTION

15 KWh / per year 672 KWh / per year 1000 KWh / per year

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10

ELECTRICITY & GROWTH

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11

PAYING FOR POWER IS KEY

Poor metering - only 40% of total sale metered. Billing on presumptive / assessed consumption. Poor billing & collection only 55% of energy generated is billed & only 41% realised. High T&D losses( 40- 50 % approx ) No serious attempt to address issue. Tariff recovers on an average 69% of the cost of supply. Domestic recovery : 56%. Agriculture recovery : 15% Distribution segment losing Rs. 47,000 crores annually. ( MoP estimates )
4/15/2013 12

POWER FOR ALL BY 2012

Required capacity additionfrom 100,000 MW in 2000 to 200,000 MW and per capita consumption to go up from 672 KWh to 1000 KWh by 2012. From 1300 MW in 1947 to 100,000 MW in 2000 53 years. Only 12 years for another 100,000 MW. Is it feasible? Funds required Rs. 9,00,000 crores including transmission systems at 2002-03 prices ( CEA estimates ).

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13

CHALLENGE OF CAPACITY ADDITION Plan Period Addition (in MW) 16,422 19,015 Percentage of Plan target 53.8 < 50

Eighth Plan Ninth Plan

Tenth Plan
Eleventh Plan (target)

23,250
78,530 Thermal 58,597 Hydro 16,553 Nuclear 3,380

56.6

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14

FUEL CHOICE - COAL

Coal reserves, at current level of consumption, can last some 80 years.

If all inferred reserves materialize, coal & lignite can last for more than 140 years.
If domestic coal production continues to grow at 5 percent per year, total extractable reserves would run out in about 40 years. In-situ coal gasification can increase energy from domestic resources significantly.

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15

FUEL CHOICE - GAS

Poor natural gas reserves till discovery in KrishnaGodavari basin by Reliance Recent large discovery by GSPC also in KrishnaGodavari basin Coal Bed Methane reserves estimated to be between 1400 BCM (1260 mtoe) to 2600 BCM (2540 mtoe).

Proved gas and CBM together can last for some 50 years.
4/15/2013 16

FUEL CHOICE - HYDRO

Present installed capacity is 36,877 MW. At the last 5 years average of 30% load factor, 1,50,000 MW of installed capacity justified. Accelerated hydro development plan aims to add 50,000 MW of new capacity. Problems of environment and ecology and social problems of resettlement of project affected people are barriers to large-scale exploitation of hydro resources.
4/15/2013 17

FUEL CHOICE - NUCLEAR

India poorly endowed with uranium, just enough to fuel 10,000 MW.
Indias uranium reserves are of low grade, extraction percentage being 0.1% compared to 12-14% abroad. Therefore 3-4 times costlier than international supplies. Substantial thorium reserves has to be converted to fissile material through Fast Breeder Reactors.

India has to import uranium fuel and FBR technology.

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18

POWER PURCHASE COST AS %AGE OF COST OF SUPPLY

Paise per kwH

469
357 365 349

Other cost

Power purchase cost

Maharashtra
Power purchase cost as %age of cost of supply
4/15/2013

Delhi
77

Gujarat
73

All India
66
19

62

COST-PLUS FALL-OUT
While differences in power cost of generating
stations can be due to differences in fuel type,

technology, location and vintage, most differences

are attributable to differing generation efficiencies

Cost-plus tariff system does not adequately

encourage / incentivise generators to improve

operational efficiencies
4/15/2013 20

PURCHASE PRICE DIFFERENCES

Power plant Type MUs Rs/Kwh

Salal

Baira Siul Tanakpur Singrauli Chamera Rihand Anta Auraiya Unchahar-I Dadri 4/15/2013 Badarpur
BTPS

Hydro Hydro Hydro Thermal Hydro Hydro Thermal Thermal Thermal Thermal Thermal

358

0.59

86 58 1,370 132 850 375 600 190 5,065 4,600

0.63 1.04 1.09 1.32 1.47 1.61 1.62 1.88 2.27 2.37

21

POWER PURCHASE CONTRACTS

Long term

Self generation Allocation from Independent power central generating producers; Bid/MOU (SEB owned stations ; CERC generators); route for projects; capacity cleared determines tariffs CERC/SERC vets the tariff by SERC

Medium term

No clear process for bridging medium term

requirements (more than a year and less than 15 years Upto one year duration contracts form small part of total power procured. SEBs propose power purchase from third parties in their ARRs, prior to actual contract Real time power requirement (in excess or deficit of scheduled drawls) drawn directly from grid without any prior permission from 22 regulator

Short term

Real time/day to day 4/15/2013

LEGISLATIVE FRAMEWORK FOR COMPETITION

Gencos free to supply electricity to any licensee or to any consumer Non-discriminatory open access to Gencos, licensees & consumers in transmission & distribution. Open access enables non-discriminatory sale/purchase of electric power/energy between two parties utilizing the system of an in-between (third party), and latter not blocking it on unreasonable grounds.
4/15/2013 23

FRAMEWORK FOR COMPETITION

Section 63 of the Act moves away from the existing regulated cost-plus tariff to tariff determination through competitive bidding route. Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government.(Section 63 of the Electricity Act, 2003)
4/15/2013 24

COMPETITION IN GENERATION
The Central Government guidelines issued for tariff-based bidding process for procurement of electricity by DISCOMS for medium term (one to seven years) and for long-term (for more than seven years). Section 66 of the Act provides for development of electricity market for price determination/price discovery. A well functioning power market leading to free competition provides national-level access to all buyers and sellers for transparent price discovery, rewards more efficient generators and reduces power procurement cost.
4/15/2013 25

TOWARDS A COMPETITIVE MARKET STRUCTURE

National Tariff Policy -2006 Open access Competitive bidding Separating wires Enforcing USO
Competitive & Contestable Price Discovery in New Generation Open Access Wholesale and Retail Competition
26

Comp. Bidding Guidelines -2004/5 Electricity Act 2003

4/15/2013

A NEW STRUCTURE
Wholesale power purchase model Reformed structure for power purchase

Single buyer model SEB/TRANSCO pools distribution utility requirements to procure power Primarily long duration contracts 15 -25 years or more Limited incentives to improve efficiency 4/15/2013 27

Multiple buyer model

(e.g., each distribution company procuring for its own requirements)

Suitable mix of long,

medium and short term contracts Market rewards players with lower costs and higher efficiencies 27

COMPETITIVE BIDDING

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28

COMPETITIVE BIDDING

4/15/2013

29

4/15/2013

30

SEB MODEL

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31

FIRST STAGE REFORM MODEL

4/15/2013

32

PRESENT REFORM MODEL

4/15/2013

33

FINAL REFORM MODEL

4/15/2013

34

4/15/2013

35

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36

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37

4/15/2013

38

POWER SUPPLY REGIONS

INDIA IS ADMINISTRATIVELY DIVIDED INTO FIVE REGIONS FOR SUPPLY OF ELECTRICITY.
1. 2. 3. 4. 5. NORTHERN REGION SOUTHERN REGION EASTERN REGION WESTERN REGION NORTH EASTERN REGION
39

4/15/2013

NORTHERN REGION
Largest in geographical area amongst the five regions covering 30.7% of the area and 28% of the countrys population. Largest number of constituents (9 states/UTs, 3 Central Generating Companies, one Central Transmission Utility and Bhakra Beas Management Board). Largest sized hydro unit (250 MW at Nathpa Jhakri) in the country. Establishment of the first super thermal power station (Singrauli STPS) and 400 kV transmission system in the country.

4/15/2013

40

NORTHERN REGION
Establishment of the first High Voltage Direct Current (HVDC) long distance transmission system in the country (2x750 MW, + 500 kV Rihand-Dadri HVDC bipole). First HVDC back-to-back interconnection with Western Region (2x250 MW back-to-back HVDC station at Vindhyachal). First 400 kV Static Var Compensators (SVCs) in the country (2x + 140 MVAR SVC at Kanpur). Largest capacity of combined cycle gas power stations amongst the five regions (2939.50 MW) located along the 700 Kms. long Hazira-Bijaipur-Jagdishpur (HBJ) natural gas pipeline of GAIL.

4/15/2013

41

NRLDC
NRLDC is the apex body to ensure integrated operation of the power system in the Northern Region. The main responsibilities of NRLDC are: Monitoring of system parameters and security. To ensure the integrated operation of the power system grid in the region. System studies, planning and contingency analysis. Analysis of tripping/disturbances and facilitating immediate remedial measures. Daily scheduling and operational planning.
4/15/2013 42

NRLDC
Facilitating bilateral and inter-regional exchanges. Computation of energy dispatch and drawl values using SEMs. Augmentation of telemetry, computing and communication facilities

4/15/2013

43

Brief details about the Northern Regional power system

i) Northern regional grid is an electrical system comprising

of over 10,00,000 sq. km of area with nine States/Union Territories namely Punjab, Haryana, Rajasthan, Delhi, Uttar Pradesh, Himachal Pradesh, Uttaranchal, Jammu Kashmir and Union territory of Chandigarh, Generating Stations at Central and State Sector Independent Power producing stations, State DISCOMS, STU etc.

4/15/2013

44

ii) The Northern region has an installed capacity of

33,785 MW as on 31.03.2006 with 16,295 MW in State Sector and 17,490 MW in Central Sector including BBMB.

iii) The States are inter-connected with each other through 400kV/220 kV network. Northern Region is connected to Western and Eastern regions through a few radial 220 kV/132 kV HVAC and HVDC Back to Back links to facilitate exchange of power from surplus to deficit region / State as well as wheeling of power.
4/15/2013 45

iv) Northern Region has catered a maximum peak

demand of 25,362 MW on 19.08.2005 with an average energy consumption of 462.96 MU during the year 2005-06.

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46

4/15/2013

47

INCREASE IN POWER GENERATION DUE TO INCREASE IN PLANT LOAD FACTOR

4/15/2013

48

4/15/2013

49

4/15/2013

50

4/15/2013

51

4/15/2013

52

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53

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54

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55

4/15/2013

56

INSTALLED CAPACITY OF NORTHERN GRID AS ON 30.04.12

DESCRIPTION
THERMAL (INCL. GAS) NUCLEAR HYDRO RENEWABLE ENERGY SOURCES TOTAL
4/15/2013

UNIT
MW MW MW MW

TOTAL CAPACITY
32791.75 1620

15122.75 4391.4

MW

53925.9
57

INSTALLED CAPACITY OF WESTERN GRID AS ON 30.04.12

DESCRIPTION
THERMAL (INCL. GAS) NUCLEAR HYDRO RENEWABLE ENERGY SOURCES

UNIT
MW MW MW MW

TOTAL CAPACITY

47296.79 1840 7447.5

7909.95
TOTAL
4/15/2013

MW

64494.24
58

INSTALLED CAPACITY OF SOUTHERN GRID AS ON 30.04.12

DESCRIPTION
THERMAL (INCL. GAS)

UNIT
MW

TOTAL CAPACITY

NUCLEAR
HYDRO RENEWABLE ENERGY SOURCES

MW
MW MW

28512.6 1320 11338.03 11569.3 52739.93

59

TOTAL
4/15/2013

MW

INSTALLED CAPACITY OF EASTERN GRID AS ON 30.04.12

DESCRIPTION
THERMAL (INCL. GAS) NUCLEAR HYDRO RENEWABLE ENERGY SOURCES

UNIT
MW MW MW MW

TOTAL CAPACITY

22005.08 0 3882.12
398.71 26285.91
60

TOTAL
4/15/2013

MW

INSTALLED CAPACITY OF NORTH EASTERN GRID AS ON 30.04.12

DESCRIPTION
THERMAL (INCL. GAS) NUCLEAR HYDRO

UNIT
MW MW MW

TOTAL CAPACITY

1026.94 0 1200 228 2454.94

61

RENEWABLE ENERGY SOURCES

TOTAL
4/15/2013

MW
MW

INSTALLED CAPACITY OF ISLANDS GRID AS ON 30.04.11

DESCRIPTION
THERMAL (INCL. GAS) NUCLEAR HYDRO RENEWABLE ENERGY SOURCES

UNIT
MW MW MW MW

TOTAL CAPACITY

70.2 0 0
6.1 76.3
62

TOTAL
4/15/2013

MW

INSTALLED CAPACITY OF INDIA AS ON 30.04.2011

DESCRIPTION THERMAL (INCL. GAS) NUCLEAR HYDRO RENEWABLE ENERGY SOURCES UNIT MW MW MW MW TOTAL CAPACITY

131703.4
4780.0

38990.4
24503.46

TOTAL
4/15/2013

MW

199977.2
63

FUEL WISE INSTALLED CAPACITY OF INDIA AS ON 30.04.12

DESCRIPTION
COAL BASED GAS DIESEL HYDRO NUCLEAR RENEWABLE ENERGY SOURCES TOTAL
4/15/2013

UNIT
MW MW MW MW MW MW

TOTAL CAPACITY

112022.4
18481.05

1199.93
4780 38990.4 24503.46

MW

199977.2
64

COST OF GENERATION FOR THE YEAR 2006-07

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65

COST OF GENERATION FOR THE YEAR 2006-07

4/15/2013

66

NTPC INSTALLED CAPACITY

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16 COAL BASED (Owned by NTPC) SINGRAULI Korba Ramagundam Farakka Vindhyachal Rihand Kahalgaon NCTPP, Dadr Talcher Kaniha Feroze Gandhi, Unchahar Talcher Thermal Simhadri Tanda Badarpur Sipat Mauda
4/15/2013

STATE Uttar Pradesh Chhattisgarh Andhra Pradesh West Bengal Madhya Pradesh Uttar Pradesh Bihar Uttar Pradesh Orissa Uttar Pradesh Orissa Andhra Pradesh Uttar Pradesh Delhi Chhattisgarh Maharashtra

COMMISSIONED CAPACITY(MW) 2,000 2,600 2,600 2,100 3,260 2,000 2,340 1,820 3,000 1,050 460 2,000 440 705 2,320 500 29,195

Total

67

NTPC INSTALLED CAPACITY

Gas based 16. 17. 18. 19. 20. 21. 22. Anta Auraiya Kawas Dadri Jhanor-Gandhar Rajiv Gandhi CCPP Kayamkulam Faridabad Total (Gas) State Rajasthan Uttar Pradesh Gujarat Uttar Pradesh Gujarat Kerala Haryana Commissioned Capacity (MW) 413 652 645 817 648 350 430

3,955

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68

NTPC INSTALLED CAPACITY GAS Power Plants with Joint Ventures

COAL STATE COMMISSI BASED ONED (Owned by CAPACITY JVs) 1. RGPPL Maharashtra 1940 Total 1940
4/15/2013 69

NTPC INSTALLED CAPACITY Power Plants with Joint Ventures

COAL BASED (Owned by JVs) STATE COMMISSIONED CAPACITY

1. Durgapur 2. Rourkela 3. Bhilai 4. Kanti 5. IGSTPP, Jhajjar 6. Vallur Total 4/15/2013

West Bengal Orissa Chhattisgarh Bihar Haryana Tamil Nadu

120 120 574 110 1000 500 2,424 70

FUTURE CAPACITY ADDITIONS

PROJECT STATE MW

Coal 1. Indira Gandhi STPP- JV with IPGCL & HPGCL (500) Haryana 500

2.
3. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Hydro 1. 2. 3.

Sipat I (660)
Simhadri II Unit - IV( 500) Vallur I -JV with TNEB ( 500) Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Bongaigaon(3 x 250) Mauda Rihand III(2X500) Vindhyachal-IV (2X500) Muzaffarpur Expansion (2x195) JV with BSEB Nabinagar TPP-JV with Railways (4 x 250) Barh II (2 X 660) Barh I (3 X 660)

Chhattisgarh
Andhra Pradesh Tamilnadu Tamilnadu Assam Maharashta Uttar Pradesh Madhya Pradesh Bihar Bihar Bihar Bihar

660
500 500 500 750 500 1000 1000 390 1000 1320 1980

Koldam HEPP ( 4 x 200) Tapovan Vishnugad HEPP (4 x 130) Singrauli CW Discharge(Small Hydre)

Himachal Pradesh Uttarakhand Uttar Pradesh

800 520 8

Total

11,428

PERFORMANCE STATISTICS
YEAR

Generation (BU) 222.07

220.54

PLF(%)

Availability Factor(%) 89.73

91.62

2011-12
2010-11

85.00
88.29

2009-10
2008-09 2007-08 2006-07 2005-06

218.84
206.94 200.86 188.67 170.88

90.81
91.14 92.24 89.43 87.52

91.76
92.47 92.12 90.09 89.91

Bulk Electricity Tariff in India

ABT as Implemented (Beneficiary)
A true two part tariff with supplementary adjustment for Net Exchange deviations from schedule
Fixed cost recovered from customers in proportion to capacity allocation Energy Charges recovered against requisitioned (scheduled, ex-bus) energy at normatively computed rates, on the respective drawal schedule

Actual Energy Generation (AG, measured ex-bus) would be different from scheduled and the deviations positive or negative settled at a price linked to system sufficiency, in that time slice.
Time slice of 15 minutes each in use Average Frequency of operation in the time slice used as an index of system sufficiency Settlement through a UI pool account

Promotes better market perception

Encourages Economy in Dispatch Avoided cost of service by rogue beneficiary is prevented.

COMPONENTS OF ABT
1. CAPACITY CHARGE
2. 3. 4. 5.

ENERGY CHARGE UI CHARGE INCENTIVE TAXES & CESS

FUELS BEING USED

TYPE SOURCE
ONGC GAS FROM MUMBAI HIGH, UNDER GOI ADMINISTERED PRICE. JV OF ONGC+RELIANCE+BRITISH GAS, PRESENTLY UNDER GOI ADMINISTERED PRICE.

APM
PMT

GAIL SPOTRLNG GSPCL-RLNG

NAPHTHA

LIQUIFIED NATURAL GAS PURCHASED FROM SPOT MARKET BY GAIL.

LIQUIFIED NATURAL GAS PURCHASED FROM SPOT MARKET BY GSPCL. LIQUID FUEL PURCHASED FROM MAJOR OIL COMPANIES & GAIL

DAILY DC DECLARATION AT ANTA

DAILY DC DECLARATION STARTS WITH THE FOLLOWING ASSUMPTIONS:GAS ALLOCATION SHALL BE SAME AS YESTERDAY. AMBIENT TEMPERATURE SHALL BE SAME AS YESTERDAY. OTHER LOSSES SHALL BE SAME AS PREVIOUS DAY. GCV OF GAS SHALL BE SAME AS PREVIOUS DAY. KNOWING THE GAS ALLOCATION AND AMBIENT TEMPERATURE, THE MAX EX-BUS CAPABILITY FOR THE NEXT DAY, BOTH ON GAS FUEL AND NAPHTHA FUEL SEPARATELY IS ESTIMATED FOR 96 TIME BLOCKS AND SENT TO RCC AT NCR-HQ FOR ONWARD TRANSMISSION TO RLDC AT 09:00 HRS. FOR ANY CHANGE IN THE ASSUMED CONDITIONS, REVISIONS IN DC ARE SENT AS PER ABT.

1. 2. 3. 4.

Rs/Unit Gen.Cost (ECR) APM/PMT NAPHTHA GAIL1-(RLNG) 1.899 8.036 3.809

LANDED COST(RS/SMC)& Rs/Ltr. 8.303 31.08 16.674

GAIL2-(SPOT)
RELIANCE APM+PMT+RIL RLNG+NEW SPOT
Remarks:-

5.955
2.748 2.485 4.015

26.070
12.018 10.837 17.575

1.The APM/PMT price was hiked by GOI to $4.2/MMBTU in June 2010 2.Dut to above the ECR of APM/PMT became almost double. 3.RIL gas was started from 01st Nov'09. 4.Additional RIL Gas Was started from Feb'10 & equivalent amount of APM/PMT is diverted from NCR to WR as per NTPC Management decision.

BREAK EVEN FREQUENCY

BREAK EVEN FREQUENCY ON ANY FUEL IS THE FREQUENCY AT WHICH;

VARIABLE CHARGE = UI CHARGE.

PRESENT BREAK EVEN FREQUENCY : NATURAL GAS :HZ NAPHTHA :HZ

4/15/2013

79